SAP unveiled the new SAP Sustainability Control Tower solution today, designed to help enterprises monitor operational performance and steer their business according to a combination of traditional- and sustainability-related performance indicators.
The cloud-based solution’s dashboard provides executives a commanding view of business operations and enables faster decision-making in response to events that, if unrecognized, would imperil company objectives.
“The release of SAP Sustainability Control Tower represents another key milestone on our mission to establish the ‘green line’ alongside the top and bottom lines as key dimensions of performance,” says Gunther Rothermel, head of SAP S/4HANA Sustainability Management. “Based on the power of SAP Business Technology Platform, the solution provides the necessary agility and flexibility to quickly adapt to evolving and changing requirements without having to write code.”
SAP Sustainability Control Tower enables companies to transform into intelligent and sustainable enterprises based on financial as well as environmental, social, and governance (ESG) indicators, allowing them to fully assess global impact both within their operations and across their business networks.
“The very first thing companies need to do on their path of becoming sustainable enterprises is to understand their environmental footprint based on facts and figures,” says Jan Gilg, president of SAP S/4HANA, SAP. “Using these insights, SAP Sustainability Control Tower combines a company’s critical ESG metrics into one aggregated view, helping leaders take informed decisions to shape a better, sustainable future.”
The Push to Become More Sustainable and Socially Responsible
A number of drivers – ecological, economic, and societal – are currently motivating businesses and entire industries to make their operations more sustainable. Companies have taken notice, for example, that investors, shareholders, regulators, and consumers increasingly demand responsibly derived products and services with a smaller environmental footprint.
In a study of consumer purchasing from 2015 to 2019, the share of sustainability-marketed products grew more than seven times faster than other products, delivering 54.7% of CPG market growth. According to The World Bank, 65 carbon pricing initiatives have already been implemented worldwide. A Deloitte survey from 2021 confirmed that younger generations want to work for companies with a purpose beyond profit.
Most recently, the ambitious goals discussed at the UN Climate Change Conference (COP26) in Glasgow made it clear that businesses are under growing pressure to accelerate their sustainability efforts in conformance with regulations and that ESG-related KPIs have become part of the “license to operate.”
In a 2021 SAP Insights global survey of business professionals who are knowledgeable about their organization’s sustainability goals, actions, and reporting methods, 17% of respondents believe environmental issues are already materially affecting their companies’ finances and operations.
But, as with every new venture, there are challenges. Early adopters seeking a complete picture of their ESG impact struggle with many reporting frameworks and standards. This hinders their ability to produce consistent and comparable investor-focused disclosures, creating a negative impact on global business. The International Federation of Accountants reported in 2018 that fragmented financial reporting systems cost the global economy US$780 billion per year.
Embedding Sustainability into Business Processes
SAP Sustainability Control Tower addresses fragmented financial reporting head-on by giving companies tools to extend their top- and bottom-line optimizations to the “green line,” based on sustainability KPIs. Using a data-driven approach, businesses can now embed sustainability throughout their business and gain actionable insights across the value chain to enable the transition to low-carbon business processes.
“The insights from combined data provide a continuous view on a company’s performance that manual processes based on spreadsheets cannot match,” says Rothermel. “Simplified steering, reporting, and performance management meet the requirements of a growing number of legal obligations as well as the emerging sustainability standards.”
Users can drill down into strategic areas within the company and across a business network to make informed decision-making based on financial and pre-financial (ESG) indicators. An optimization can then be made between costs and greenhouse gas emissions. For example, a company’s chief financial officer could quantify the total impact of a business activity on the environment and society and manage trade-offs based on a comparable monetary currency.
SAP Sustainability Control Tower uses the World Economic Forum’s Stakeholder Capitalism Metrics as a foundation. These can be applied by companies to align reporting on performance against ESG indicators and include non-financial disclosures centered around four pillars: people, planet, prosperity, and principles of governance. The Stakeholder Capitalism Metrics promote alignment among ESG frameworks and create data points that are comparable between companies, regardless of industry or region.
Co-Innovating with Customers and Partners
As part of its co-innovation model, SAP has worked closely with numerous customers and partners to test SAP Sustainability Control Tower during development to ensure it meets market requirements and is focused on users’ needs. Customer feedback is continually used to improve the product and adapt the road map to customer priorities. Partnerships with BCG, Deloitte, EY, and PwC will help reinforce SAP’s strong value proposition to its customers on ESG reporting and climate compliance.
SAP has long been committed to fully integrating sustainability into its strategy and business model, and recently achieved top scores as an ESG leader by the Carbon Disclosure Project (CDP) and Dow Jones Sustainability Indices (DJSI). It is only natural, therefore, for the company to apply SAP Sustainability Control Tower in its own operations.
“At SAP, we believe in managing business success holistically and have been reporting on our financial, social, and environmental performance in one integrated report since 2012,” says Daniel Schmid, SAP’s chief sustainability officer. “We are excited about being an early adopter of SAP Sustainability Control Tower, which will help us further simplify and automate our reporting processes by enabling us to integrate financial and pre-financial data on an ongoing basis. Based on the insights derived from the combined data we can manage and steer the company performance while minimizing manual processes.”
SAP Sustainability Control Tower is one of numerous sustainability solutions SAP released in 2021. In November, the company introduced SAP Responsible Design and Production, a solution for designing products sustainably and transitioning to a circular economy. With SAP Product Footprint Management, introduced in September, companies can gain visibility into carbon footprint data throughout a product’s supply chain, enabling intelligent supply chain decisions that improve sustainability KPIs. This product-related carbon footprint data – collected during production, material sourcing, and transport – can be used by other solutions, such as SAP Integrated Business Planning for Supply Chain.